“Apple’s got a shot at making ‘augmented reality’ really work, writes, Bernstein analyst Toni Sacconaghi in a note to clients this morning, but it won’t mean much for the company’s bottom line till Apple comes up with a pair of ‘smartglasses,’ a product that ‘could be enormous’ for Apple,” Tiernan Ray reports for Barron’s.

” Sacconaghi, who has, an Outperform rating on Apple stock, and a $175 price target, notes the frequent, upbeat statements by Apple chief Tim Cook about augmented reality, statements of the sort ‘I am so excited about [AR], I just want to yell out and scream,’ from October 3rd of last year,” Ray reports. “‘If a CEO’s comments are reflective of a company’s enthusiasm about a new opportunity, then Apple clearly thinks AR might be a big deal,’ writes Sacconaghi. Also, he notes several acquisitions by Apple in the last four years of AR, or AR-related startups, including SMI for ‘eye-tracking hardware,’ this past July, and RealFace and Facechift last year, among others.”

Sacconaghi writes, “‘We believe that actual applications for AR will be very limited in the next 1-2 years, as long as the technology remains constricted to smartphone hardware,'” Ray reports. “‘Smartglasses could potentially generate tens of billions of dollars in annual hardware sales for Apple. Comparing it to Apple’s last blockbuster product launch, the iPad, we believe that smartglasses could have just as wide (if not wider) appeal over time,'” Sacconaghi writes.

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6 Comments

MDN, can you please enlighten us as to what these new “paradigm shift” applications will be? In what ways will augmented reality “change everything”? Because as of now, statements like these just sound like a lot of hyperbolic bloviation.

I’m pretty sure I recall similar hyperbole about Google Glass (‘In a year, EVERYONE will be wearing them!’). I’m not holding my breath on this one. AR is cool, and it’ll have its uses, but that’s all. The hype actually serves to downplay the cool things it WILL do well, and by extension, the possible profit by actually focusing on and targeting those things. To say anything is going to fundamentally change every single facet of existence in the universe forever and ever is silly, untenable, unrealistic, and ultimately relegates potentially useful ideas to being fads. Analysts are, as ever, not the sharpest tools in the shed. Hopefully, the people at Apple are smarter than that.

So far we have a slightly inaccurate AR rulers, Take On Me dance parties, and lipstick simulators. How are these “changing everything” again? “But developers are just getting started!” you say… just like they were for the Apple Watch right? And please do tell me how you will interact with these smart glasses… by waving you hands in the air? By talking to them? Every new technology platform isn’t going to be the next smartphone.
Don’t get me wrong, AR will have cool niche applications, especially in games and professional applications where your hands need to be free, but my grandma and the vast billions of average consumers won’t be getting smart-glasses anytime soon. I’d love to be proven wrong, but I just don’t see any shred of substance to justify the level of hype. Once you start asking questions, the idea quickly breaks down.

Augmented Reality will change everything, as much as the smartphone has done over the past 10 years. But having to wear a pair of dorky glasses isn’t going to cut it. Didn’t work for Google…why do you think it’s going to work for Apple. (And what of the millions of people who already wear glasses?)

Until Apple perfects implantable eyeballs with AR built in, AR will need to be viewed through some sort of hand-held panel… although THAT could be something special (flexible, foldable, expandable, etc.)